868.51 WarCredits/396

The Secretary of State to the British Ambassador ( Howard )

Excellency: I have the honor to acknowledge the receipt of Your Excellency’s communication of November 23, 1925 in which you state that the attention of your Government has been drawn to the contracts recently concluded by the Greek Government which appear to your Government to conflict with the obligations assumed by Greece under the agreement between that country and Great Britain, France and the United States of February 10, 1918. The contracts to which Your Excellency’s note refers are those of the Société Commerciale de Belgique à Ougrée and of the Foundation Company of New York.

With respect to the contract of the Belgian Company, the Department’s information is not sufficient to enable it to judge whether new securities have already been effectively pledged within the meaning of the 1918 Agreement. A telegram has been addressed to the American Legation at Athens to secure further details on this point.4

With respect to the contract of the Foundation Company of September 7th, I desire to state that the Foundation Company informed the Department last summer of its negotiations with the Greek Government and at that time stated that they were aware of the provisions of the 1918 Loan Agreement with Greece and their bearing upon the flotation under the contract of an external loan.5 So far as the Department is informed no external loan has as yet been floated as provided in Article 26; nor is the Department advised that final arrangements for such flotation have actually been made.

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It would hardly appear that the mere conclusion of a contract which provides for an eventual loan flotation and the pledging of security therefor should be regarded as a violation by the Greek Government of its obligation under the 1918 Agreement.

This Department is disposed to consider that by the terms of the contract no new assets will in fact be pledged for an external loan within the meaning of the 1918 Agreement until the loan itself is made. The pledging of the securities would seem to be conditioned on the eventual flotation of the loan. If, therefore, the Greek Government requests and obtains the necessary consents prior to the actual flotation of the loan, in the opinion of this Government there would be no reason to complain that the 1918 Agreement had been violated.

In the event that the Greek Government should proceed with a loan flotation in connection with the contract with the Foundation Company or the contract with the Société Commerciale de Belgique à Ougrée without consulting this Government, the Department would be disposed to bring the matter to the attention of the Greek Government.

In this connection I may state that on August 14, 1925 the Legation at Athens in presenting a note to the Greek Government6 with respect to the funding by the latter of its indebtedness to the United States was authorized to state that if the Government of Greece should make satisfactory arrangements for the funding of its debt to the United States this Government would be prepared, after consultation with the other powers parties to the 1918 Agreement, to examine the question of relieving that Government of its present obligation to obtain the consent of the United States to the pledging of any new securities for external loans.

Accept [etc.]

Frank B. Kellogg
  1. Telegram not printed.
  2. Correspondence not printed.
  3. See instruction No. 237, July 31, 1925, to the Chargé in Greece, Foreign Relations, 1925, vol. i, p. 158.